THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: By the way, tomorrow in "The Situation Room," I'll sit down live with Mitt Romney, ask him the big question that's been on some people's minds right now. Will he run again a third time in 2016? We'll talk about that. We'll talk about security at the Sochi Winter Olympic Games tomorrow, 5:00 p.m. Eastern, in "THE SITUATION ROOM."

Getting more schools online, President Obama announces a major education overhaul. More details from one of the president's top economic advisers. Gene Sperling joining us live from the White House. We'll also ask him about this new Congressional report on the economic effects of Obamacare. That's next.

(COMMERCIAL BREAK)

BLITZER: Turning now to Afghanistan. President Hamid Karzai reportedly holding secret talks with the Taliban. The "New York Times" says he appears to be hedging his bets after U.S. forces leave the country. Supposedly all U.S. troops are supposed to be out by the end of this year.

Pentagon correspondent, Barbara Starr, is following all of this.

Barbara, as you know, the U.S., I think, wants to keep about 10,000 U.S. troops in 2015-2016. Karzai is causing all sorts of headaches for the Obama administration. Now there's reports he's talking to the Taliban. What's going on?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Wolf, it wouldn't be the first time the Karzai administration has talked to the Taliban, or at least tried to. Several efforts in the past, and they really haven't gone anywhere.

<13:35:01>

Why might Karzai be doing this now? Well, he's about 60 days away from the next presidential election in Afghanistan. He is not able to run again. But he has got legacy issues. He wants to make sure he's getting the best deal he can, many people say, before he leaves office. And he wants to ensure at a minimum, his own security, one can only suppose, in the next regime.

Senator John McCain is someone you talked to all of the time, has been very adamant in his criticism of Karzai and his criticism of Karzai and the U.S. not coming to it an agreement to let those troops stay.

I want you to listen to some of what McCain has been saying lately.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R), ARIZONA: We should not be surprised that President Karzai has been having secret contacts with the Taliban, because he knows that we are leaving. And therefore, he has to try to accommodate for that most likely scenario. He doesn't have any sign- off. President Karzai is paranoid and irrational. But like most people with paranoia, there is a basis for that. And when he reads that the United States is planning on having everybody out by 2017, then he makes accommodations, such as trying to negotiate with the Taliban. That is completely understandable.

(END VIDEO CLIP)

STARR: So again, I think most people would tell you, Karzai is looking to cut the best deal he can, you know, before he leaves office. But for the Obama administration, they can only pledge, even if this new deal is signed that would keep U.S. troops, only to keep them really until the end of the Obama administration. It would be up to a new president of the United States to decide how to proceed after 2017.

And even as we speak, Wolf, at the White House today, a big meeting with top officials on the way ahead in Afghanistan, talking about Karzai, and talking about how to monitor Pakistan if the U.S. isn't allowed to keep that listening post of U.S. troops on the Afghan side of the border. How do you keep an eye on al Qaeda in Pakistan? And maybe even more dire, how do you keep an eye on Pakistan's nuclear program -- Wolf?

BLITZER: There was talk in the Pentagon, Pentagon planners saying if the U.S. is going to keep in 2015-2016, 10,000 U.S. Troops, let's say another 4,000 or 5,000 NATO troops, they've got to know very, very soon in order to make those plans. Otherwise, everyone is going to be withdrawn by the end of this year. What is the drop-dead deadline, according to Pentagon planners, for a decision on whether or not to keep any troops in Afghanistan after the end of this year?

STARR: I am smiling, Wolf, because that's the key question. That's the question we ask around the Pentagon almost every day. That is the question they do not want to answer. They want to give themselves as much flexibility as possible. One can only suppose in hopes after the presidential election in Afghanistan in 60 days, a new president will be more forthcoming in signing the agreement.

But look, by July, the U.S. will have the basic force, that follow-on force, of 10,000 in shape and in place in Afghanistan, plus whatever other troops it has there. So the -- sometime between July and December, they have got to make the decision, either pull everybody out, the 30,000 or so that are left right now, or leave the 10,000 there -- Wolf?

BLITZER: We remember what happened a couple years ago in Iraq. All U.S. troops were pulled out, no residual force left in. We see what's happening in Iraq, obviously, right now. A real, real disaster unfolding there.

All right, thanks very much. Barbara Starr at the Pentagon.

A new congressional report sheds some light on the economic impact of Obamacare. So what does it mean for all of us? We're going to get details from one of the president's top economic advisers. There he is, Gene Sperling. He's standing by live at the White House. We'll discuss right after this.

(COMMERCIAL BREAK)

<13:42:18>

BLITZER: President Obama made a major education announcement today. Speaking at a school in Delphi, Maryland, just a while ago, he unveiled a federal government partnership with several tech companies that will provide computers, faster Internet service for the nation's school children.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If you're studying science and you're actually seeing the engineers who built rover, Curiosity Rover, and how they did it, and being able to see the rover on the Martian landscape, it makes vivid and real math and science in a way that is more interesting to the students, which means they're more likely to be engaged and can potentially do better. And this is how it should be for every student and every teacher at every school and library in the country.

(APPLAUSE)

OBAMA: That's how it should be for everybody, not just some.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: Gene Sperling is the director of the National Economic Council. He's an assistant to the president on economic policy. He's joining us now from the White House.

Gene, thanks very much for coming in.

GENE SPERLING, DIRECTOR, NATIONAL ECONOMIC COUNCIL & ASSISTANT TO THE PRESIDENT ON ECONOMIC POLICY: Thanks, Wolf.

BLITZER: Clearly, a very ambitious $2 billion plan. What's the time table here to get it fully implemented, to get all the schools in the United States, kindergarten through high school, on board. How many children are going to be affected by what the president announced today?

SPERLING: So what the president announced last year in the state of the union was the goal that in five years, we would bring high-speed broad band to the schools that would cover 99 percent of our children. And the reason he was doing that, Wolf, is because the entire vision that we would like to see in the classroom where young people learn at their desk with a digital device at their own pace, none of that can happen if 70 percent of our schools don't even have the broadband necessary to empower more than a computer lab in their school.

So what happened now is that because of the hunger, I think, America has had to make good on this goal, the FCC has found available money, reprioritized, reallocated, so they could do a down payment, $2 billion, which will connect 20 million young people, about half of the young people that today are not connected to high-speed broadband. And then what was just really almost unprecedented today was that the president made a call to the private sector. And they responded with $750 billion -- that's a "B" -- three-quarters of a trillion dollars in commitments, which included laptops, and making Internet service available for lower income young people at home.

<13:45:01>

Microsoft offered, you know, deep discounts and free word packets for low-income schools. Apple offered $100 million in tablets and other devices for low-income schools. So this was an enormous down payment. And I think it shows just the hunger in the country for action and to move forward on a national goal when the president does a call to action. And it showed we can do it even without Congress and without adding a penny to the deficit.

BLITZER: And those high-tech firms, they deserve a lot of credit for getting involved and helping to educate the young people of the United States.

(CROSSTALK)

SPERLING: Wolf, I added -- I'm sorry, it was three-quarters of a billion, so the "B" is the three-quarters of a billion dollars. But that is a lot for seven companies to put forward for a national goal, three-quarters of a billion dollars.

BLITZER: Yeah. They're doing important work.

While you're here, let's talk about this Congressional Budget Office report today. Because there are a lot of headlines coming out that there are a lot of numbers. I assume you've gone through it already.

SPERLING: Yes.

BLITZER: But one of the things sparking a lot of buzz out there is that the Affordable Care Act could wind up costing the U.S. labor force the equivalent of about 2.3 million workers by the year 2021. That sounds very, very disturbing. Go ahead and react to what is in this nonpartisan CBO report.

SPERLING: Well, first of all, let's look what's happened so far. People said jobs would be destroyed by the Affordable Care Act. 8.1 million private-sector jobs have been created in the last 45 months. That's the best since the 1990s. That's what's happened since the Affordable Care Act. It also showed that the Affordable Care Act would still be taking -- still reducing the deficit by $1 trillion. The health care costs are the lowest that they have been in a very long time.

What this report said should not suggest this is going to cost jobs. What this report said is a rather obvious point, which is that as people have greater access to health care, there is going to be some two-parent families where someone says I'm going to work a little less because we can get health care and I'm going spend time raising my children. There is going to be somebody out there who because they can afford health care has wanted to retire and may retire earlier. This is about giving Americans more choices.

And on the overall impact on what it's going to mean for jobs, well, I think that's an incomplete number, because we know that with lower health care costs, we're going to have more productivity, some experts predicting hundreds of thousands of more jobs due to that.

So I think the key is, we have seen that the Affordable Care Act brings down costs. That's going to be good for wages. That's going to be good for productivity. And the numbers that are being incorrectly portrayed as costing jobs are just saying that as Americans have more choices, just like Social Security gives them the choice to work less and retire with dignity. Providing health care is going to provide some families who are working overtime, working very hard, some will choose to work a little less, spend more time with their family, because the Affordable Care Act has offered them a more affordable option for health care.

BLITZER: Do you accept that number, 2.3 million workers, fewer workers than would have been the case by 2021 because of the Affordable Care Act?

SPERLING: No, I don't. No, I don't --

(CROSSTALK)

BLITZER: That's in the report.

SPERLING: But I don't -- first of all, I don't accept that portrayal. Because that's implying this is costing jobs, as opposed to just giving more Americans the option. These people who are working more than they want to simply for health care, some of them will have the option of working a little less. And in terms of what the overall impact on jobs will be, I think you're going to -- you have to look at what the impact on productivity is, because people are healthier, working harder, having less sick days. You have to look at, what is the productivity benefits of having lower health care costs in our economy. I believe very strongly, and I think it should be very clear, the Affordable Care Act is good for growth, good for job growth, good for deficit reduction. And these numbers should not be misinterpreted to suggest somehow this is -- this is costing jobs. Just look what's happened so far. Since the Affordable Care Act took place, we have heard all the predictions of job-killing. And we have seen 8.1 million jobs in 45 months. That's better -- just think, the whole previous decade before, we only created 3.8 million jobs in the economy. So --

(CROSSTALK)

BLITZER: Well, but remember, the Affordable Care Act didn't take full effect until October 1st.

SPERLING: Well, no. I mean, what we heard is that this was going to threaten people. And, of course, lots of parts took effect earlier. No, I think that what you're seeing is historically low health care costs. And I think all this report is doing -- I mean, Wolf, think of it this way. You could sit there and say that before Social Security happened, somebody would say, oh, people are going to work less hours, because they can retire. Or if you don't allow child labor, there will be less hours worked, because people are going to school.

<11:50:00>

These are the types of things that in an advanced economy give people more options and choice. They don't cost jobs. They give people more options and choice to live their lives as they have. When you have two parents and they're both working full-time to provide health care, and they don't feel they're there to do homework with their kids, and this allows one of the kids to work a little less because they have health care, that's not costing jobs. That's giving typical hard- working American families more choices and more options. And that's a positive thing.

BLITZER: Gene Sperling getting ready to wrap up his tenure over at the White House. Got another month to go. We'll stay in close touch.

Gene Sperling, thanks very much.

SPERLING: Thank you, Wolf.

BLITZER: Gene Sperling, over at the White House.

Meanwhile, two Senators say Secretary of State John Kerry admits that U.S. policy in Syria has been a failure. The State Department calls that a mischaracterization. We're going to get the latest on that front right after this.

(COMMERCIAL BREAK)

BLITZER: Two Senators say Secretary of State John Kerry has admitted that U.S. policy in Syria is failing, and they say Kerry is calling for a change in strategy, according to reports in "The Daily Beast," "Washington Post," "Bloomberg View." But the State Department calls those comments a mischaracterization of what Kerry said during a private meeting.

Let's bring in our foreign affairs reporter Elise Labott.

Elise, officials where you are at the State Department are disputing these claims by Republican Senators John McCain and Lindsey Graham. What are they saying? ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: Basically, Wolf, this is about a conversation that Secretary Kerry had over the weekend at the Munich Security Conference with about 15 congressmen. Some of those congressmen, Senator McCain and others talked to these journalists and said in the meeting that Secretary Kerry said the policy was failing, that the U.S. administration needs to do more. The State Department came out strong and said, listen, he didn't exactly say that. Obviously, Secretary Kerry was talking about concern for the situation on the ground in Syria, the growing humanitarian situation, growth of extremists on the ground. But he didn't explicitly call for a change in policy.

CNN's Dana Bash actually spoke to one of the Senators in the room with Secretary Kerry, and said, well, it is true that Secretary Kerry did not call explicitly for a change in policy. He did say that he was concerned about the situation. He said more needed to be done to help the opposition, that they needed to work more closely with the Russians, the Russians aren't exactly being helpful and that they could do more. And also, that this chemical weapons deal that was really the thing that staved off military action against Syria has stalled. So Secretary Kerry's a little bit of both. He wasn't actually saying that the administration policy was failing, that they needed a new wholesale policy. But the secretary has been pretty vocal about the fact that he wants to see a little bit more done to help the opposition, and a more robust policy -- Wolf?

BLITZER: There's no doubt that there's a lot going on. Let's not lose sight of the fact that the humanitarian crisis in Syria is awful. Well more than 100,000 people killed. Millions of people displaced from their homes, now refugees. We'll continue to watch the story.

Elise Labott, at the State Department, thanks very much.

That's it for me. Thanks very much for watching. I'll be back 5:00 p.m. Eastern in "THE SITUATION ROOM."

NEWSROOM continues right now, after a quick break, with Brooke Baldwin.